Capital Gains Tax - Help please

Take her to the nearest Inland Revenue Enquiry Centre and ask for an Inspector there to show how it would be calculated using those facts and figures.

He/she should know to ask any pertinent questions which you may have forgotten and whether a 1982 valuation would be beneficial. He/she should also be able to give her a form if she requires the local valuation office to become involved after the fact e.g. a post transaction valuation ruling once the sales go through.

However, I'd leave it for three weeks until all the last minute filers have been in.

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That said, there are various points arising from your post e.g. If she sells the property/business after 5 April 2004 any liability will not be payable until the end of January 2006. If she sells it before then the liability, if there is one, will be payable by end of January

2005. Her ex-husband's liability, if there is any, will relate to the date she buys fom him. All being well, I would expect that her liability, if there is one, should relate to the date she sells up.

Yet a few lines further down you suggest that she can sell it for £40k. Does she propose to sell it? Is there a reason for the disparity?

See above concerning 1982 valuation. The higher this is the better because she (and the ex) will be due indexation (an inflation adjustment) on this for the period 1982 to March 1998 when indexation was scrapped.

You will need to explain what this is for in order for an expert to determine whether it will attract business asset taper relief or not.

Notwithstanding the divorce, the question as to whether this is an "arms length" transaction may need to be addressd.

See my point above as to the mixed message as to the "worth" of the business when it is bought from the "ex".

Another critical factor is what she intends to do with the money. Although of an age at which many retire, it may be that she wishes to undertake a similar business venture elsewhere. Depending on what she spends acquiring such a business, she may find that she is eligible for business asset reinvestment relief. This might mitigate any liability that had arisen as a result of the sale.

On the plus side, so far as the property alone is concerned, it seems to me that even if she retires and puts it all in the building society the tax due on any resultant gain would not be astronomical. This is because of the indexation relief for 1982-1998, taper relief between

1998 and 2004 and then her own annual exemption (about £7.5K) in the year of sale.

And none here will know whether there any CGT losses from other transactions that can now be brought into play.

Of course, the gain between what she expects to pay her husband for the goodwill and shortly afterwards will sell it on for might be a sticking point. For that reason if no other I feel bound to suggest that a measure of professional advice is required.

In message , snipped-for-privacy@email.com writes

MMM! I made a capital gain on the sale of land in February 2003, and my year end is 31 March. It was my understanding that the CGT is due this month, or is it due next year?

In the same vein, I intend to make a gain from the sale of a business in April, and I was assuming the CGT would be due next Jan, or will this be due in Jan 2006.

I could cause a lot of trouble with the money in a year

It is crazy to bring a question like this to a User group. By all means research the subject and learn about CGT, but this lady has too many issues for anyone here to give you a sensible answer.

The business has been producing accounts. If the accounts have been handled by a Chartered Accountant, and he is a good one, she should go to him for advice. NOT to the Inland Revenue! There are often different interpretations the same facts, a good accountant should be able to steer her round some expensive hazards.

Blurting out untruths to an eager Tax Inspector could do serious harm.

April is too vague in tax terms! It depends whether it is 1-5 or 6-30.

You're right, it's due this month.

But what do you mean "your" year end? If this is a gain you made personally, then surely the normal tax year (i.e. to 5th April) would apply, and only if the gain had been incurred within the wrapper of an existing bona fide business, would that business's accounting year end be relevant.

If you sell before 6th April, it would fall into the 2003/04 tax year, and tax would be due in January 2005. If you sell after 5th April, it would be part of the 2004/05 account, with tax due in January 2006.

Obviously it was just a very general response that I would have expected, more of a quick response from people who possibly knew more than us.

However professional advice would obviously be sought, it is often good to be armed with some decent questions and possible other scenarios when getting that professional advice. I am sure she could go to three accountants with this and come out with three differing views.

I am very much in agreement though that taking it directly for advice to the Inland Revenue could be particularly harmful if not only that I again believe you could go to different offices and come out with different advice but also they should be dealt with on a "need to know when I am ready to tell them" basis I reckon.

Absolutely. And those three views would be based on their varying experiences of what does or does not go wrong. There may be no "best" answer because no one can know how the future will pan out.

You are right to glean knowledge like this, and she is correct in trying to seek knowledge from the internet.

In message , Peter Saxton writes

It will be April 6, or later, to be on the safe side.

Wow!! just realised I have confused myself completely - of course the CGT from Feb 03 is due this month and, of course a gain after Apr 5 is due Jan 06. However, I will probably exchange contracts in Feb or Mar, so the CGT will be due in Jan 05.

Good idea!